Amanda Ltd started a corporate training firm on 1 st September 2021. During the period up to
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Question:
Amanda Ltd started a corporate training firm on 1st September 2021. During the period up to 30th June 2022, the following transactions occurred:
For each of the following transactions calculate the effect on revenues and expenses (using accrual accounting) for the 10 months ending 30th June 2022:
- Amanda put $20,000 of her own money into the business
- She borrowed $30,000 from the bank at 5 percent per annum for one year on 1st September with interest to be paid at the end of each quarter. The first payment is, therefore, due on 30th November 2021.
- She has invoiced a total of $150,000 to customers for work performed and up to 30 June 2022, she had received $120,000 and expected the other $30,000 to be received in the financial year ending 30th June 2023.
- She bought a car on credit for the business at a cost of $70,000 on 1st September 2021 that has an expected useful life of five years, with an expected residual value of $10,000. The car will be paid for on 1st September 2022.
- She paid herself $80,000 in wages for the year-end 30th June 2022.
- She paid $10,000 in advance in May 2022 for an advertisement that will appear in certain corporate journals in July 2022.
- She received a total of $25,000 in invoices relating to rental and utility charges and has so far paid $20,000 towards them by the 30th June 2022.
(c) Calculate the profit for the 10 months ending 30th June 2022 using cash accounting, and show clear workings in the text box below.
(d) Calculate balance of total assets as at 30th June 2022, and show clear workings, in the text box below. Assume accrual accounting was applied.
Related Book For
College Accounting A Practical Approach
ISBN: 978-0132564441
11th Canadian Edition
Authors: Jeffrey Slater, Brian Zwicker
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